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© Copyright 2000 Rogers Media. The following article first appeared in the December 2000 edition of
BENEFITS CANADA magazine.
Insights
Contrarian views, news and international intrigue
By Andrea Davis
Testing flex
More than one-third of employers in the Toronto area report their benefits costs have increased since
making the switch from a standard benefits plan to a flexible benefits plan. The results are from a survey
conducted by the Toronto Board of Trade, which looked at the benefits and compensation practices of 325
employers in the greater Toronto area.
Other findings include:
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11% of employers provide flexible benefits. Of those, 46% provide a core plan, 16% provide a modular
plan and 22% provide flex credits or flex dollars.
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27% of employers who have flex benefits report their costs have not changed since moving from a
standard benefits plan to flex while 24% report a decrease in costs since the switch.
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More than one-third (35%) of employers with flex benefits feel their methods of communication with
employees are effective while more than half (54%) feel their communication methods need improving.
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Three-quarters of employers say their overall benefits costs increased this year. Of those, one-third
report an increase of more than 10%.
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Cost containment strategies planned by Toronto-area employers for 2001 include introducing limits or
caps for specific benefits (10%), limiting reimbursement of dispensing fees for drugs (8%),
introduction of a drug card (7%) and introduction of a drug formulary (3%).
On the pension side, 87% of employers surveyed provide some type of pension or retirement plan for their
employees. Group registered retirement savings plans (RRSPs) are the most common option, with 50% of
employers offering them, followed by defined benefit plans at 31% and defined contribution plans at 31%.
Twenty-one per cent of employers report offering pre-retirement counselling as a benefit.
Stress control
When it comes to coping with stress in the workplace, many plan members may feel like they have the weight
of the world on their shoulders. And while benefits and human resources professionals may recognize the
need to help alleviate stress for employees, it's not always easy to get senior management to address the
issue. But a new resource from Health Canada may help. Best Advice on Stress Risk Management in the
Workplace is a self-contained presentation that aims to show how excessive stress and the costs
associated with it can be identified and contained in workplace settings.
The report points out that two major sources of workplace stress are employees having too little control
over the day-to-day organization of their work as well as a heavy work-load over too long a period of time.
"Employers know, or ought to know, that when they impose excessive or unnecessary stress on employees, they
place them in harm's way," says the report.
Other sources that can cause undue stress include unclear communications about job pressures and
expectations, lack of input among employees on everything from work allocation to workspace design and
lighting, and the introduction of new technologies.
Waiting times
Waiting times for medical treatment in Canada are growing. According to research from Vancouver-based
Fraser Institute, the time between receiving a general practitioner's referral and obtaining treatment from
a specialist jumped from 9.7 weeks in 1994 to 13.3 weeks in 1998.
SOURCE: The Fraser Institute
Q & A
Sandra Foster is the author of Who's Minding Your Money? Financial Intelligence for Canadian
Investors. She spoke to benefits canada about the need for financial advice programs in defined
contribution (DC) plans.
Do DC plan sponsors have a role to play in providing plan members with financial advice?
I personally believe they do. It's difficult to know how much financial advice to provide, who should be
providing it and how to know whether it's really objective and doesn't compromise the sponsor's role.
What are the risks involved for plan sponsors who do want to provide access to financial advice?
One of the big questions is who's going to provide that advice. We want to make sure the advice is
objective, that it's in the employee's best interests, that it's comprehensive to the needs of the
employee.
You see a trend towards employees who are moving from a defined benefit (DB) to a DC plan being required to
get their own independent advice, or having to waive their right to that advice, before switching. Why?
For a number of employees, DC looks really good on the surface but they don't realize the amount of risk
that they personally are taking on.
If you go from a DB plan to a DC plan, people just don't have the skills in today's marketplace to know
what to do. A lot of people may be misguided because when the market goes up, it looks like investing is
reasonably easy. But there are financial planning strategies that will enhance the income they have at
retirement, as well as help the employee be more focused and comfortable with what they're doing.
You see a trend towards financial education becoming a standard employee benefit, much like drug coverage.
Why?
When you've got a DC plan, the decisions the individual employees make can make a big difference in what
they end up with at the end of the day. You could have two employees making the same amount of money,
contributing the same amount on an annual basis. One might build a well-constructed portfolio and one might
be overly aggressive and end up not having enough money for retirement. And that just doesn't seem quite
right to me.
Vacation time
Canadian employees receive half as many vacation days as their counterparts in some other countries,
according to a recent study by William M. Mercer Ltd.
For instance, an employee with five years of service who works five days a week in Brazil is entitled under
law to 30 days of leave. In Germany, employees are entitled to 24 vacation days. In Canada, meanwhile,
workers with five years of service are only entitled to 15 days off, one of the lowest rates of the 55
countries surveyed by Mercer. In the Czech Republic, workers are entitled to 15 days off but usually take
20.
Japan was one of the few countries that ranked below Canada in terms of actual time off. Five-year
employees there are entitled to take 16 days off but in practice take just 10 days.
Antibiotic use
Plan sponsors have a role to play in educating plan members about the inappropriate use of antibiotics.
"One of the significant factors in the over-prescribing of antibiotics has to do with patients expecting or
demanding antibiotics [from] their doctor," says Dr. Edith Blondel-Hill, an infectious disease specialist
and associate professor with the faculty of medicine at the University of Alberta in Edmonton. She
currently heads a project called Do Bugs Need Drugs? in the Edmonton region that will focus on
educating healthcare professionals and the public.
Antibiotic use, meanwhile, is on the decline as the 2000 flu season begins, according to research from IMS
Health. Between 1990 and 1995, the number of prescriptions for antibiotics steadily increased to 27.3
million annually. By the end of 1999, the number of prescriptions for antibiotics decreased by close to two
million, to 25.5 million. Prescriptions for amoxicillin, the most commonly used first-line antibiotic,
declined for the fifth straight year to reach 5.9 million in 1999. Prescriptions for second-line
antibiotics, though, increased to a total of 3.1 million in 1999, representing a 22.8% increase over 1998.
"I remain concerned with the increasing recourse to second-line antibiotics," says Dr. Donald Low, chief,
Toronto Medical Laboratories and department of microbiology at Mount Sinai Hospital. "Despite our efforts
to encourage [doctors] to use older anti-infectives, it would seem there is still education needed in this
area."
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